Spotlight on Rob Hinchliffe, Portfolio Manager, Head of Global Sector Cluster Research, PineBridge Investments
Global Thought Leader Spotlight
Rob Hinchliffe, Portfolio Manager, Head of Global Sector Cluster Research, PineBridge Investments
It is one of the longest-running debates in investing: growth vs. value. For decades, leading financial minds and countless investors around the world have gone back and forth over which of the two major investment styles is the more effective and reliable strategy for outperforming the markets.
2022’s volatility saw a major reversal in growth’s decade-and-a-half of dominance. Now, a tiny sliver of growth has contributed to one of the narrowest rebounds on record, with eight stocks contributing to 55% of the ACWI index’s performance in the first half of 2023, potentially setting investors up for another fall. Is your focus on style investing giving you “bad breadth” and is it time to move on from style investing altogether?
As we see it, there are two main problems with reducing equity allocation decisions to a binary decision between growth and value.
One is a problem of prediction. Predicting the future is always tricky, and the timing of style shifts especially so. Historically, inflation has proved stubborn to control once it reaches as high as 8%, as it did in 2022, which bodes well for value. On the other hand, a few such periods have proved more transitory.
The other problem is definition – the problem of what exactly a growth and value investment is. There are subtle but important differences in the definitions various index providers and active managers use to construct their “growth” and “value” portfolios. Moreover, the degree to which stocks meet those definitions tends to move around over time.
In my role as Portfolio Manager and Head of Global Cluster Research at PineBridge Investments I am responsible for managing the PineBridge Global Focus Equity strategy, as well as bringing together the firm’s worldwide research across global industries to drive investment insights.
PineBridge focuses on alpha, but at a similar level of risk to the benchmark. Our alpha tools are designed to consistently seek excess returns from stock selection without adding tracking error or other market risk and have been tested across widely varying market conditions.
Instead of trying to determine which will outperform within finite periods, we believe in using growth and value as inputs as part of a process for choosing stocks individually for their ability to generate results ahead of market expectations. Our approach is classified as style neutral, or “core”.
In our world view, companies are inherently dynamic entities that evolve from less to more mature levels of growth over time (and sometimes back). Some, by the nature of their business, may be more tied to the economic cycle, but even they tend to evolve into more (or less) potent and dependable sources of earnings growth. Thus, it is important to understand both which growth stage a company is in today and where it will be in the future. These principles form the basis of our proprietary Lifecycle Categorisation Research (LCR) framework.
Through proper LCR categorisation, we believe we can more accurately evaluate a company and determine the likelihood of a stock outperforming the market’s expectations for it – our driving purpose.
Rob will be presenting at Global Investment Institute’s upcoming Equities Investment Forum, taking place on Wednesday, 6 September 2023 at Westin Melbourne.
His presentation will explore a better mousetrap to create a diversified global equity portfolio more resilient to style shifts and volatility across market cycles and why growth and value labels are becoming increasingly inadequate to classify stocks.
To register your interest in attending, click here or for more information email zlatan.kapetanovic@globalii.com.au.
Rob Hinchliffe, Portfolio Manager, Head of Global Sector Cluster Research, PineBridge Investments
Rob joined the firm in 2008 and serves as a Portfolio Manager for the Global Focus Equity strategy. He is also the Head of Global Sector Cluster Research and is responsible for bringing together the firm’s worldwide research across global industries to drive investment insights. Previously, Rob was a Senior Equity Analyst at UBS, where he was recognised by StarMine for stock selection, and began his investing career in finance at Bear Stearns in 1997.
Rob received his BA in Economics from Rutgers College and his MBA in Finance from New York University. He is a CFA charter holder.
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